Participants Hungry for Electronic Education, Advice

Since late 2011, more than 530,000 participants have signed
up for a new “opt-in” feature to receive electronic delivery of educational
materials to help make decisions about employer benefits, retirement planning
and other relevant financial topics, according to Bank of America Merrill
Lynch’s quarterly 401(k) Wellness Scorecard. On average, nearly 2,000
participants sign up for this electronic feature daily, the report found.

“Participants are … demanding that and wanting that type of
advice,” Michael Liersch, director of behavioral finance for Bank of America
Merrill Lynch, told PLANADVISER.

Participants may already know what they want to do with
respect to retirement planning, but they need education and tools to enhance
their planning ability, Liersch said. “When employees have the right
information out on the table, we also see that they exhibit better behaviors,”
he added.

Advice is another tool that can help participants plan their
retirement. Participants enrolled in Bank of America Merrill Lynch’s Advice
Access program are showing an increased tendency toward better financial
well-being, according to results from the company’s Financial Wellness Monitor.
From June 30, 2011, to June 30, 2012, the increase in “Well” participants
nearly doubled for those in Advice Access (up 6%, to 87% “Well”) versus those
not in Advice Access (up just 3%, to 64% “Well”).

(Cont...)

During the recession, participants tended to maintain advice
services, with 98% staying in the program, said Kevin Crain, head of
institutional retirement & benefit services for Bank of America Merrill
Lynch.

Continued usage of advice features was not the only thing
that remained on the upside in the recession. Since 2009, which many view as
the lowest point in the recession, 401(k) contribution patterns positively show
a widening gap between the percent of plan participants starting/increasing
their savings versus those stopping/decreasing, according to the report.

“The opt-out rates stayed very consistent [during the
recession],” Crain said. Overall, Crain said he finds it encouraging that
participants want to save for retirement—they just need help doing it.

Advisers should discuss solutions with sponsors that can
increase retirement success, Crain added. They can encourage sponsors to set up
the plan with an advice service, a higher initial deferral rate than 3%,
enrollment for all eligible employees in the plan rather than just new hires,
and automatic enrollment paired with automatic escalation.